EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

ASM International N.V.

 

  Contact:    Naud van der Ven    + 31 30 229 85 40   
     Mary Jo Dieckhaus    + 1 212 986 29 00   
     Erik Kamerbeek    + 31 30 229 85 00   

ASM INTERNATIONAL REPORTS

SECOND QUARTER 2008 OPERATING RESULTS

BILTHOVEN, THE NETHERLANDS, July 31, 2008 - ASM International N.V. (NASDAQ: ASMI and Euronext Amsterdam: ASM) reports today its second quarter 2008 operating results in accordance with US GAAP.

 

•  

Net sales of the second quarter of 2008 were EUR 209.4 million, up 6% from the first quarter of 2008 and down 18% from the second quarter of 2007.

 

•  

Net earnings of the second quarter of 2008 were EUR 9.6 million, or EUR 0.18 diluted net earnings per share, as compared to net earnings of EUR 12.6 million, or EUR 0.22 diluted net earnings per share for the first quarter of 2008 and net earnings of EUR 14.9 million, or EUR 0.26 diluted net earnings per share for the second quarter of 2007.

 

•  

Bookings in the second quarter of 2008 were EUR 193.3 million, up 3% from the first quarter of 2008. Bookings from our Front-end segment were down 20% and bookings from our Back-end segment were up 19%. Quarter-end backlog was EUR 174.5 million, down 8% from the end of the previous quarter.

 

•  

We have signed a letter of intent to sell our majority owned subsidiary NanoPhotonics AG, in accordance with our Roadmap to Front-end Peer Group Profitability. In the second quarter of 2008 we recorded an impairment charge of EUR 1.4 million related to goodwill of our investment in NanoPhotonics.

Commenting on the 2008 second quarter operating results, Chuck del Prado, President and Chief Executive Officer of ASM International, said, “The contraction in demand for wafer processing equipment in the second quarter was largely due to the impact of the severely weakened global economic sentiment on top of the already stagnant customer ordering patterns. Although we have made substantial progress this year in driving down breakeven levels, the low level of bookings and billings in recent months necessarily had a material impact on Front-end operating margins.”

“Despite this protracted market weakness which has been well-documented by industry participants, we remain diligent in implementing our Roadmap to reach Peer Group Profitability in 2009, and increasing long-term value for all our shareholders. We are confident that ASMI’s strategy and established technology leadership are positioning Front-end operations for solid growth as the industry recovers in 2009 and beyond.”

“On a bright note,” he continued, “Our Back-end operations turned in a stellar performance, once again outperforming the global assembly and packaging market. Revenues in Back-end increased 17%, and profitability improved in line with that. At the core of Back-end’s success is its unique vertically-integrated business model, and to confirm the company’s confidence in the model’s long-term viability, Back-end has made significant investment in capacity expansion in recent quarters.”

 

1

Three months ended June 30, 2008.

The following table shows the operating performance for the second quarter of 2008 as compared to the first quarter of 2008 and the second quarter of 2007:

 

(EUR millions, except earnings per share)

    Q2 2007     Q1 2008     Q2 2008     % Change
Q1 2008
to
Q2 2008		     % Change
Q2 2007
to
Q2 2008		  

Net sales

    254.7     197.1     209.4     6 %   (18 )%

Gross profit

    96.9     76.4     81.2     6 %   (16 )%

Gross profit margin %

    38.0 %   38.8 %   38.8 %   —       0.8 %(1)

Selling, general and administrative expenses

    (32.9 )   (29.1 )   (31.8 )   9 %   (3 )%

Research and development expenses

    (21.5 )   (18.9 )   (18.4 )   (2 )%   (14 )%

Amortization of other intangible assets

    (0.1 )   (0.1 )   (0.1 )   (7 )%   (16 )%

Impairment of goodwill

    —       —       (1.4 )   na     na  
                              

Earnings from operations

    42.4     28.3     29.5     4 %   (30 )%

Net earnings

    14.9     12.6     9.6     (24 )%   (36 )%

Diluted net earnings per share

    0.26     0.22     0.18      

New orders

    226.9     187.3     193.3     3 %   (15 )%

Backlog at end of period

    242.6     190.6     174.5     (8 )%   (28 )%

 

(1) Percentage point change

Net Sales. The following table shows net sales of our Front-end and Back-end segments for the second quarter of 2008 as compared to the first quarter of 2008 and the second quarter of 2007:

 

(EUR millions)

    Q2 2007    Q1 2008    Q2 2008    % Change
Q1 2008
to
Q2 2008		     % Change
Q2 2007
to
Q2 2008		  

Front-end

    120.4    83.9    77.2    (8 )%   (36 )%

Back-end

    134.3    113.2    132.2    17 %   (2 )%
                           

Total net sales

    254.7    197.1    209.4    6 %   (18 )%
                           

In the second quarter of 2008, net sales of wafer processing equipment (Front-end segment) represented 36.9% of total net sales. Net sales of assembly and packaging equipment and materials (Back-end segment) represented 63.1% of total net sales in the second quarter of 2008.

The decrease of net sales of our Front-end segment was noticed in all product lines except for increased sales of Transistor Products, and sales of Epitaxy products being stable. We experienced in particular a decrease in the DRAM market in Taiwan.

Market penetration of ALD technology based Transistor Products is progressing well.

The weakening of the Yen, US dollar and US dollar related currencies against the euro in the second quarter of 2008 as compared to the first quarter of 2008 and the second quarter of 2007 impacted total net sales negatively by 3% and 11% respectively.

 

2

Gross Profit Margin. The following table shows our gross profit and gross profit margin for Front-end and Back-end segments for the second quarter of 2008 as compared to the first quarter of 2008 and the second quarter of 2007:

 

(EUR millions)

    Gross
profit
Q2 2007		    Gross
profit
Q1 2008		    Gross
profit
Q2 2008		    Gross
profit
margin
Q2 2007		     Gross
profit
margin
Q1 2008		     Gross
profit
margin
Q2 2008		     Increase or
(decrease)
percentage
points
Q1 2008 to
Q2 2008		     Increase or
(decrease)
percentage
points
Q2 2007 to
Q2 2008		  

Front-end

    38.5    28.6    24.6    32.0 %   34.0 %   31.9 %   (2.1 )   (0.1 )

Back-end

    58.4    47.8    56.6    43.5 %   42.2 %   42.8 %   0.6     (0.7 )
                                             

Total gross profit

    96.9    76.4    81.2    38.0 %   38.8 %   38.8 %   —       0.8  
                                             

The gross profit margin of our Front-end segment decreased from the first quarter of 2008 mainly due to decreased utilization of capacity and a one-off decrease of the gross margin of our Vertical Furnace products.

The gross profit margin of our Back-end segment increased from the first quarter of 2008 driven by increased utilization of capacity.

Selling, General and Administrative Expenses. The following table shows selling, general and administrative expenses for our Front-end and Back-end segments for the second quarter of 2008 as compared to the first quarter of 2008 and the second quarter of 2007:

 

(EUR millions)

    Q2 2007    Q1 2008    Q2 2008    % Change
Q1 2008
to
Q2 2008		     % Change
Q2 2007
to
Q2 2008		  

Front-end

    19.2    16.5    17.9    8 %   (7 )%

Back-end

    13.7    12.6    13.9    11 %   1 %
                           

Total selling, general and administrative expenses

    32.9    29.1    31.8    9 %   (3 )%
                           

The selling, general and administrative expenses of our Front-end segment increased from the first quarter of 2008. Increased corporate expenses related to discussions with shareholders were an important driver.

As a percentage of net sales, selling, general and administrative expenses were 15% in the second quarter of 2008, 15% in the first quarter of 2008 and 13% in the second quarter of 2007.

Research and Development Expenses. The following table shows research and development expenses for our Front-end and Back-end segments for the second quarter of 2008 as compared to the first quarter of 2008 and the second quarter of 2007:

 

(EUR millions)

    Q2 2007    Q1 2008    Q2 2008    %Change
Q1 2008
to
Q2 2008		     % Change
Q2 2007
to
Q2 2008		  

Front-end

    13.8    11.7    11.0    (6 )%   (20 )%

Back-end

    7.7    7.2    7.4    4 %   (4 )%
                           

Total research and development expenses

    21.5    18.9    18.4    (2 )%   (14 )%
                           

The decrease in the Front-end segment from the first quarter of 2008 was mainly the result of the weakening of the Yen and US dollar against the euro.

As a percentage of net sales, research and development expenses were 9% in the second quarter of 2008, 10% in the first quarter of 2008 and 8% in the second quarter of 2007.

 

3

Earnings from Operations. The following table shows earnings from operations for our Front-end and Back-end segments for the second quarter of 2008 as compared to the first quarter of 2008 and the second quarter of 2007:

 

(EUR millions)

    Q2 2007    Q1 2008    Q2 2008     % Change
Q1 2008
to
Q2 2008		     % Change
Q2 2007
to
Q2 2008		  

Front-end

    5.5    0.2    (5.8 )   (2,801 )%   (205 )%

Back-end

    36.9    28.1    35.3     25 %   (4 )%
                            

Total earnings from operations

    42.4    28.3    29.5     4 %   (30 )%
                            

The decrease in the Front-end segment is the result of lower sales, at lower margins, and an impairment charge of EUR 1.4 million related to goodwill of our investment in NanoPhotonics. Excluding the impairment charge, earnings from operations of our Front-end segment amount to a loss of EUR 4.4 million.

The increase in the Back-end segment is in line with increased sales.

Net Earnings. The following table shows net earnings for our Front-end and Back-end segments for the second quarter of 2008 as compared to the first quarter of 2008 and the second quarter of 2007:

 

(EUR millions)

    Q2 2007     Q1 2008     Q2 2008     % Change
Q1 2008
to
Q2 2008		     % Change
Q2 2007
to
Q2 2008		  

Front-end

    (3.1 )   (1.1 )   (6.8 )   (540 )%   (119 )%

Back-end

    18.0     13.7     16.4     21 %   (8 )%
                              

Total net earnings

    14.9     12.6     9.6     (24 )%   (36 )%
                              

Net earnings of our Front-end segment for the second quarter of 2008 include impairment charges of EUR 1.4 million related to goodwill of our investment in NanoPhotonics. Excluding the impairment charge, net earnings of our Front-end segment amount to a loss of EUR 5.4 million.

Net earnings of our Front-end segment for the second quarter of 2007 include expenses resulting from the early extinguishment of convertible debt of EUR 5.9 million. Excluding the expense resulting from the early extinguishment of convertible debt, our Front-end segment achieved positive net earnings in the second quarter of 2007 of EUR 2.8 million.

Net earnings for the Back-end segment reflect our 53.1% ownership of ASM Pacific Technology.

 

4

Six months ended June 30, 2008.

The following table shows the operating performance and the percentage change for the six months ended June 30, 2008 compared to the same period in 2007:

 

(EUR millions, except earnings per share)

    Six months ended June 30,        
   2007     2008     % Change  

Net sales

    464.8     406.5     (13 )%

Gross profit margin

    169.7     157.6     (7 )%

Gross profit margin %

    36.5 %   38.8 %   2.3 (1)

Selling, general and administrative expenses

    (62.8 )   (60.9 )   (3 )%

Research and development expenses

    (41.3 )   (37.3 )   (10 )%

Amortization of other intangible assets

    (0.3 )   (0.2 )   (14 )%

Impairment of goodwill

    —       (1.4 )   na  
                  

Earnings from operations

    65.3     57.8     (12 )%

Net earnings

    26.1     22.2     (15 )%

Diluted net earnings per share

    0.46     0.41    

New orders

    473.1     380.6     (20 )%

Backlog at the end of period

    242.6     174.5     (28 )%

 

(1)    Percentage points change.

 

Net Sales. The following table shows net sales for the Front-end and Back-end segments and the percentage change for the six months ended June 30, 2008 compared to the same period in 2007:

 

      

  

(EUR millions)

    Six months ended June 30,        
   2007     2008     % Change  

Front-end

    236.7     161.1     (32 )%

Back-end

    228.1     245.4     8 %
                  

Total net sales

    464.8     406.5     (13 )%
                  

In the six months ended June 30, 2008, net sales of wafer processing equipment (Front-end segment) represented 39.6% of total net sales. Net sales of assembly and packaging equipment and materials (Back-end segment) represented 60.4% of total net sales.

The weakening of the Yen, US dollar and US dollar related currencies against the euro in the six months ended June 30, 2008 compared to the six months ended June 30, 2007 impacted net sales negatively by 10%.

Gross Profit Margin. The following table shows the gross profit margin for Front-end and Back-end segments and the percentage point change for the six months ended June 30, 2008 compared to the same period in 2007:

 

(EUR millions)

    Six months ended June 30,      
   2007    2008    2007     2008     Increase or
(decrease)
percentage
points

Front-end

    73.5    53.2    31.0 %   33.0 %   2.0

Back-end

    96.2    104.4    42.2 %   42.6 %   0.4
                          

Total gross profit

    169.7    157.6    36.5 %   38.8 %   2.3
                          

 

5

The gross profit margin of our Front-end segment increased due to changes in the product mix and the results from cost reduction programs which have been implemented since the third quarter of 2007.

The gross profit margin of our Back-end segment increased driven by increased utilization of capacity.

Selling, General and Administrative Expenses. The following table shows selling, general and administrative expenses for Front-end and Back-end segments and the percentage change for the six months ended June 30, 2008 compared to the same period in 2007:

 

(EUR millions)

    Six months ended June 30,       
   2007    2008    % Change  

Front-end

    37.3    34.4    (8 )%

Back-end

    25.5    26.5    4 %
                

Total selling, general and administrative expenses

    62.8    60.9    (3 )%
                

As a percentage of net sales, selling, general and administrative expenses were 15% in the first half of 2008, compared to 14% in the first half of 2007.

Research and Development Expenses. The following table shows research and development expenses for Front-end and Back-end segments and the percentage change for the six months ended June 30, 2008 compared to the same period in 2007:

 

(EUR millions)

    Six months ended June 30,       
   2007    2008    % Change  

Front-end

    26.9    22.7    (16 )%

Back-end

    14.4    14.6    2 %
                

Total research and development expenses

    41.3    37.3    (10 )%
                

As a percentage of net sales, research and development expenses were 9% in both the first half of 2008 and the first half of 2007.

Earnings from Operations. The following table shows earnings from operations for the Front-end and Back-end segments and the percentage change for the six months ended June 30, 2008 compared to the same period in 2007:

 

(EUR millions)

    Six months ended June 30,        
   2007    2008     % Change  

Front-end

    8.9    (5.6 )   na  

Back-end

    56.4    63.4     12 %
                 

Consolidated earnings from operations

    65.3    57.8     (12 )%
                 

Earnings from operations for the Front-end segment for the first half of 2008 include impairment charges of EUR 1.4 million related to goodwill of our investment in NanoPhotonics.

 

6

Net Earnings. The following table shows net earnings for the Front-end and Back-end segments and the percentage change for the six months ended June 30, 2008 compared to the same period in 2007:

 

(EUR millions)

    Six months ended June 30,        
   2007     2008     % Change  

Front-end

    (1.9 )   (7.9 )   (316 )%

Back-end

    28.0     30.1     8 %
                  

Consolidated net earnings

    26.1     22.2     (15 )%
                  

Net earnings of our Front-end segment for the first half of 2008 include impairment charges of EUR 1.4 million related to goodwill of our investment in NanoPhotonics. Excluding the impairment charge, net earnings of our Front-end segment amount to a loss of EUR 6.5 million.

Net earnings of our Front-end segment for the first half of 2007 include expenses resulting from the early extinguishment of convertible debt of EUR 5.9 million. Excluding the expense resulting from the early extinguishment of convertible debt, our Front-end segment achieved positive net earnings in the first half of 2007 of EUR 4.0 million.

Bookings and backlog

The following table shows, for our Front-end and Back-end segments, the level of new orders for the second quarter of 2008 and the backlog at the end of the second quarter as compared to the first quarter of 2008 and the second quarter of 2007:

 

(EUR millions, except book-to-bill ratio)

    Q2 2007    Q1 2008    Q2 2008    % Change
Q1 2008
to
Q2 2008		     % Change
Q2 2007
to
Q2 2008		  

Front-end:

              

New orders for the quarter

    81.9    76.2    60.8    (20 )%   (26 )%

Backlog at the end of the quarter

    134.3    91.5    75.1    (18 )%   (44 )%

Book-to-bill ratio (new orders divided by net sales)

    0.68    0.91    0.79     

Back-end:

              

New orders for the quarter

    145.0    111.1    132.5    19 %   (9 )%

Backlog at the end of the quarter

    108.3    99.1    99.4    nm     (8 )%

Book-to-bill ratio (new orders divided by net sales)

    1.08    0.98    1.00     

Total

              

New orders for the quarter

    226.9    187.3    193.3    3 %   (15 )%

Backlog at the end of the quarter

    242.6    190.6    174.5    (8 )%   (28 )%

Book-to-bill ratio (new orders divided by net sales)

    0.89    0.95    0.92     

In line with the market, order intake of our Front-end segment decreased in the second quarter of 2008. The decrease was noticed in all product lines except for PECVD.

 

7

The following table shows the level of new orders during the six months ended June 30, 2007 and 2008 and the backlog at June 30, 2007 and 2008 and the percentage change:

 

(EUR millions, except book-to-bill ratio)

    Six months ended June 30,       
   2007    2008    % Change  

Front-end:

         

New orders

    215.5    137.0    (36 )%

Backlog at June 30

    134.3    75.1    (44 )%

Book-to-bill ratio (new orders divided by net sales)

    0.91    0.85   

Back-end:

         

New orders

    257.6    243.6    (5 )%

Backlog at June 30

    108.3    99.4    (8 )%

Book-to-bill ratio (new orders divided by net sales)

    1.13    0.99   

Total

         

New orders

    473.1    380.6    (20 )%

Backlog at June 30

    242.6    174.5    (28 )%

Book-to-bill ratio (new orders divided by net sales)

    1.02    0.94   

The book-to-bill ratio of our Back-end segment is 1.02 when measured in local currency.

Liquidity and capital resources

Net cash provided by operations in the second quarter of 2008 was EUR 29.5 million as compared to net cash provided by operations of EUR 19.0 million in the second quarter of 2007. For the six months ended June 30, 2008, net cash provided by operations was EUR 61.4 million compared to cash provided by operations of EUR 30.9 million for the same period in 2007. These developments result primarily from decreased working capital.

Net cash used in investing activities in the second quarter of 2008 was EUR 8.0 million, compared to EUR 16.4 million in the second quarter of 2007. For the six months ended June 30, 2008, net cash used in investing activities was EUR 15.5 million compared to EUR 22.8 million for the same period in 2007. These developments result mainly from decreased capital expenditures.

Net cash used in financing activities in the second quarter of 2008 was EUR 54.5 million, compared to EUR 44.7 million in the second quarter of 2007. For the six months ended June 30, 2008, net cash used in financing activities was EUR 57.1 million compared to EUR 45.6 million for the same period in 2007. These developments included the purchase of treasury shares (EUR 32.0 million) in the first half of 2008. In accordance with our commitment made in 2006, we have utilized the EUR 25.3 million dividends received from Back-end operations to purchase treasury shares. EUR 6.7 million of the dividends expected to be received from Back-end operations in August is allocated to the treasury shares already purchased. Included in the second quarter of 2007 were the purchase of treasury shares (EUR 3.5 million) and the buy back of convertible debt (EUR 20.5 million). In the second quarter of 2008, our Back-end operations paid EUR 22.3 million of dividends to its minority shareholders, compared to EUR 20.9 million in the second quarter of 2007.

Net working capital, consisting of accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from customers and deferred revenue, increased from EUR 262.3 million at March 31, 2008 to EUR 271.1 million at June 30, 2008. The increase is primarily the result of increased sales of our Back-end segment, in particular in June 2008. The

 

8

number of outstanding days of working capital, measured based on annual sales, increased from 102 days at March 31, 2008 to 110 days at June 30, 2008. During the same period, our Front-end segment increased from 120 days to 137 days, while our Back-end segment increased from 87 days to 91 days.

At June 30, 2008, our principal sources of liquidity consisted of EUR 152.3 million in cash and cash equivalents and EUR 92.8 million in undrawn bank lines. Approximately EUR 57.1 million of the cash and cash equivalents and EUR 24.6 million of the undrawn bank lines are restricted to use in our Back-end operations. Approximately EUR 12.0 million of the cash and cash equivalents and EUR 17.2 million in undrawn bank lines are restricted to use in our Front-end operations in Japan.

Dividend

We will continue with our dividend policy as formulated in 2007. Based on this, we intend to propose to the May 2009 Annual General Meeting of Shareholders to pay a dividend over 2008. There will be no payment of an interim dividend in 2008.

Outlook

In recent weeks, both industry analysts and companies in the sector have forecasted material further declines in 2008 front-end capital equipment spending. For the back-end assembly and packaging markets, the contraction is expected to be less severe.

In light of the ongoing softness in front-end capital spending for 2008, ASMI anticipates increased weakness in Front-end revenues for the third quarter. At the same time, we focus on further reducing the operating expenses.

In Back-end, based on strong bookings through the second quarter, and a book-to-bill of 1 for the period, our assembly and packaging operations are expected to deliver solid results for the third quarter, and, once again, should continue to outperform the sector.

 

9

ASM INTERNATIONAL CONFERENCE CALL

ASM International will host an investor conference call and web cast on

FRIDAY, AUGUST 1, 2008 at

09:00 a.m. US Eastern time

15:00 p.m Continental European time.

The teleconference dial-in numbers are as follows:

 

United States:

    +1 866.966.5335

International:

    +44 (0)20.3023.4456

A simultaneous audio web cast will be accessible at www.asm.com.

The teleconference will be available for replay, beginning one hour after completion of the live broadcast, through August 15, 2008. The replay dial-in numbers are:

 

United States:

    +1 866.583.1035

International:

    +44 (0)20.8196.1998

Access code:

    117327#

About ASM International

ASM International N.V., headquartered in Bilthoven, the Netherlands, and its subsidiaries design and manufacture equipment and materials used to produce semiconductor devices. ASM International and its subsidiaries provide production solutions for wafer processing (Front-end segment) as well as assembly and packaging (Back-end segment) through facilities in the United States, Europe, Japan and Asia. ASM International’s common stock trades on NASDAQ (symbol ASMI) and the Euronext Amsterdam Stock Exchange (symbol ASM). For more information, visit ASMI’s website at www.asm.com.

Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: All matters discussed in this statement, except for any historical data, are forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These include, but are not limited to, economic conditions and trends in the semiconductor industry generally and the timing of the industry cycles specifically, currency fluctuations, the timing of significant orders, market acceptance of new products, competitive factors, litigation involving intellectual property, shareholder and other issues, commercial and economic disruption due to natural disasters, terrorist activity, armed conflict or political instability, epidemics and other risks indicated in the Company’s filings from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, the Company’s reports on Form 20-F and Form 6-K. The Company assumes no obligation nor intends to update or revise any forward-looking statements to reflect future developments or circumstances.

 

10

ASM INTERNATIONAL N.V.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(thousands, except earnings per share data)

    In Euro  
   Three months ended June 30,     Six months ended June 30,  
   2007     2008     2007     2008  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Net sales

    254,714     209,400     464,805     406,479  

Cost of sales

    (157,815 )   (128,179 )   (295,147 )   (248,836 )
                        

Gross profit

    96,899     81,221     169,658     157,643  

Operating expenses:

         

Selling, general and administrative

    (32,923 )   (31,793 )   (62,800 )   (60,919 )

Research and development

    (21,466 )   (18,420 )   (41,254 )   (37,283 )

Amortization of other intangible assets

    (139 )   (117 )   (283 )   (243 )

Impairment of goodwill

    —       (1,395 )   —       (1,395 )
                        

Total operating expenses

    (54,528 )   (51,725 )   (104,337 )   (99,840 )
                        

Earnings from operations

    42,371     29,496     65,321     57,803  

Net interest expense

    (1,000 )   (945 )   (2,026 )   (1,744 )

Expense resulting from early extinguishment of debt

    (5,910 )   —       (5,910 )   —    

Foreign currency exchange losses (gains)

    (783 )   (525 )   (724 )   402  
                        

Earnings before income taxes and minority interest

    34,678     28,026     56,661     56,461  

Income tax expense

    (4,028 )   (3,882 )   (6,158 )   (7,859 )
                        

Earnings before minority interest

    30,650     24,144     50,503     48,602  

Minority interest

    (15,747 )   (14,548 )   (24,443 )   (26,367 )
                        

Net earnings

    14,903     9,596     26,060     22,235  
                        

Dividend preferred shares

    —       (2 )   —       (2 )
                        

Net earnings to common shareholders

    14,903     9,594     26,060     22,233  
                        

Net earnings per share:

         

Basic net earnings

    0.28     0.19     0.48     0.42  

Diluted net earnings (1)

    0.26     0.18     0.46     0.41  
                        

Weighted average number of common shares used in computing per share amounts (in thousands):

         

Basic

    53,986     51,852     53,930     52,823  

Diluted (1)

    65,767     61,915     65,968     62,787  
                        

 

(1) The calculation of diluted net earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in earnings of the Company. Only instruments that have a dilutive effect on net earnings are included in the calculation. The assumed conversion results in adjustment in the weighted average number of common shares and net earnings due to the related impact on interest expense. The calculation is done for each reporting period individually.

ASM INTERNATIONAL N.V.

CONSOLIDATED BALANCE SHEETS

 

(thousands, except share data)

    In Euro  
   December 31,
2007		     June 30,
2008		  
           (unaudited)  

Assets

     

Cash and cash equivalents

    167,923     152,285  

Accounts receivable, net

    229,160     198,731  

Inventories, net

    205,504     201,402  

Income taxes receivable

    117     92  

Deferred tax assets

    4,062     4,480  

Other current assets

    26,786     32,381  
            

Total current assets

    633,552     589,371  

Debt issuance costs

    2,316     1,764  

Deferred tax assets

    951     943  

Other intangible assets

    4,251     5,077  

Goodwill, net

    49,621     44,484  

Property, plant and equipment, net

    149,642     140,427  
            

Total Assets

    840,333     782,066  
            

Liabilities and Shareholders’ Equity

     

Notes payable to banks

    16,677     17,046  

Accounts payable

    99,046     78,968  

Accrued expenses

    68,076     62,318  

Advance payments from customers

    10,039     11,373  

Deferred revenue

    12,377     9,391  

Income taxes payable

    19,686     20,517  

Current portion of long-term debt

    15,438     13,684  
            

Total current liabilities

    241,339     213,297  

Pension liabilities

    3,872     3,751  

Deferred tax liabilities

    799     682  

Long-term debt

    15,828     13,031  

Convertible subordinated debt

    138,993     125,217  
            

Total Liabilities

    400,831     355,978  

Minority interest

    120,624     117,399  

Shareholders’ Equity:

     

Common shares

     

Authorized 110,000,000 shares, par value € 0.04, issued and outstanding 54,005,214 and 54,251,471 shares

    2,160     2,170  

Financing preferred shares, issued none

    —       —    

Preferred shares, issued and outstanding none and 21,985 shares

    —       220  

Capital in excess of par value

    319,657     323,304  

Treasury shares at cost

    (3,985 )   (32,950 )

Retained earnings

    73,965     95,975  

Accumulated other comprehensive loss

    (72,919 )   (80,030 )
            

Total Shareholders’ Equity

    318,878     308,689  
            

Total Liabilities and Shareholders’ Equity

    840,333     782,066  
            

ASM INTERNATIONAL N.V.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(thousands)

    In Euro  
   Three months ended June 30,     Six months ended June 30,  
   2007     2008     2007     2008  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Increase (decrease) in cash and cash equivalents:

         

Cash flows from operating activities:

         

Net earnings

    14,903     9,596     26,060     22,235  

Adjustments to reconcile net earnings to net cash from operating activities:

         

Depreciation property, plant and equipment

    8,345     7,739     16,729     15,661  

Amortization of other intangible assets

    344     360     695     731  

Impairment of goodwill

    —       1,395     —       1,395  

Amortization of debt issuance costs

    222     260     454     433  

Compensation expense employee stock option plan

    458     455     816     880  

Compensation expense employee share incentive scheme ASMPT

    2,537     2,233     3,219     3,094  

Deferred income taxes

    358     (303 )   (76 )   (593 )

Expense resulting from early extinguishment of debt

    5,910     —       5,910     —    

Minority interest

    15,747     14,548     24,443     26,367  

Changes in other assets and liabilities:

         

Accounts receivable

    (44,417 )   (1,461 )   (47,980 )   21,697  

Inventories

    (7,018 )   6,123     (23,028 )   (5,325 )

Other current assets

    (5,460 )   (690 )   (10,068 )   (7,116 )

Accounts payable and accrued expenses

    24,854     (9,068 )   24,092     (19,362 )

Advance payments from customers

    (1,867 )   (1,899 )   1,917     2,162  

Deferred revenue

    719     (3,167 )   3,779     (2,883 )

Pension liabilities

    122     41     247     122  

Income taxes

    3,241     3,378     3,648     1,948  
                        

Net cash provided by operating activities

    18,998     29,540     30,857     61,446  
                        

Cash flows from investing activities:

         

Capital expenditures

    (16,259 )   (6,852 )   (22,405 )   (16,617 )

Purchase of other intangible assets

    (146 )   (1,638 )   (482 )   (1,814 )

Proceeds from sale of property, plant and equipment

    9     441     106     2,977  
                        

Net cash used in investing activities

    (16,396 )   (8,049 )   (22,781 )   (15,454 )
                        

Cash flows from financing activities:

         

Notes payable to banks, net

    (901 )   256     (1,726 )   506  

Proceeds of long-term debt and subordinated debt

    1,204     —       1,204     —    

Repayments of long-term debt and subordinated debt

    (22,891 )   (2,663 )   (24,234 )   (4,392 )

Purchase of treasury shares

    (3,495 )   (30,914 )   (3,495 )   (32,018 )

Proceeds from issuance of preferred shares

    —       220     —       220  

Proceeds from issuance of common shares and exercise of stock options

    2,269     918     3,570     952  

Dividend to minority shareholders

    (20,920 )   (22,341 )   (20,920 )   (22,341 )
                        

Net cash used in financing activities

    (44,734 )   (54,524 )   (45,601 )   (57,073 )

Exchange rate effects

    (1,980 )   (1,205 )   (2,919 )   (4,557 )
                        

Net increase (decrease) in cash and cash equivalents

    (44,112 )   (34,238 )   (40,444 )   (15,638 )

Cash and cash equivalents at beginning of period

    197,540     186,523     193,872     167,923  
                        

Cash and cash equivalents at end of period

    153,428     152,285     153,428     152,285  
                        

Supplemental disclosures of cash flow information

         

Cash paid during the period for:

         

Interest, net

    3,196     2,476     2,210     1,815  

Income taxes, net

    428     806     2,586     6,503  
                        

Non cash investing and financing activities:

         

Conversion of subordinated debt into 349,286 common shares

    —       4,656     —       4,656  
                        

ASM INTERNATIONAL N.V.

DISCLOSURE ABOUT SEGMENTS AND RELATED INFORMATION (1/2)

The Company organizes its activities in two operating segments, Front-end and Back-end.

The Front-end segment manufactures and sells equipment used in wafer processing, encompassing the fabrication steps in which silicon wafers are layered with semiconductor devices. The segment is a product driven organizational unit comprised of manufacturing, service, and sales operations in Europe, the United States, Japan and Southeast Asia.

The Back-end segment manufactures and sells equipment and materials used in assembly and packaging, encompassing the processes in which silicon wafers are separated into individual circuits and subsequently assembled, packaged and tested. The segment is organized in ASM Pacific Technology Ltd., in which the Company holds a majority interest of 53.10% at June 30, 2008, whilst the remaining shares are listed on the Stock Exchange of Hong Kong. The segment’s main operations are located in Hong Kong, Singapore, the People’s Republic of China and Malaysia.

 

(thousands)

    In Euro  
      Front-end     Back-end     Total  

Three months ended June 30, 2007

    (unaudited)     (unaudited)     (unaudited)  

Net sales to unaffiliated customers

    120,413     134,301     254,714  

Gross profit

    38,546     58,353     96,899  

Earnings from operations

    5,495     36,876     42,371  

Net interest income (expense)

    (1,632 )   632     (1,000 )

Expense resulting from early extinguishment of debt

    (5,910 )   —       (5,910 )

Foreign currency transaction losses

    (264 )   (519 )   (783 )

Income tax expense

    (791 )   (3,237 )   (4,028 )

Minority interest

    —       (15,747 )   (15,747 )

Net earnings (loss)

    (3,102 )   18,005     14,903  

Capital expenditures and purchase of intangible assets

    4,681     11,724     16,405  

Depreciation and amortization

    4,157     4,532     8,689  

Three months ended June 30, 2008

    (unaudited)     (unaudited)     (unaudited)  

Net sales to unaffiliated customers

    77,170     132,230     209,400  

Gross profit

    24,592     56,629     81,221  

Earnings from operations

    (5,754 )   35,250     29,496  

Net interest income (expense)

    (1,150 )   205     (945 )

Foreign currency transaction gains (losses)

    (19 )   (506 )   (525 )

Income tax benefit (expense)

    121     (4,003 )   (3,882 )

Minority interest

    —       (14,548 )   (14,548 )

Net earnings (loss)

    (6,802 )   16,398     9,596  

Dividend preferred shares

    (2 )   —       (2 )

Net earnings (loss) to common shareholders

    (6,804 )   16,398     9,594  

Capital expenditures and purchase of intangible assets

    3,491     4,999     8,490  

Depreciation and amortization

    3,626     4,473     8,099  

Impairment of goodwill

    1,395     —       1,395  

ASM INTERNATIONAL N.V.

DISCLOSURE ABOUT SEGMENTS AND RELATED INFORMATION (2/2)

 

(thousands, except headcount)

    In Euro  
      Front-end     Back-end     Total  

Six months ended June 30, 2007

    (unaudited)     (unaudited)     (unaudited)  

Net sales to unaffiliated customers

    236,690     228,115     464,805  

Gross profit

    73,443     96,215     169,658  

Earnings from operations

    8,934     56,387     65,321  

Net interest income (expense)

    (3,563 )   1,537     (2,026 )

Expense resulting from early extinguishment of debt

    (5,910 )   —       (5,910 )

Foreign currency transaction gains (losses)

    (804 )   80     (724 )

Income tax expense

    (545 )   (5,613 )   (6,158 )

Minority interest

    —       (24,443 )   (24,443 )

Net earnings (loss)

    (1,888 )   27,948     26,060  

Capital expenditures and purchase of intangible assets

    5,957     16,930     22,887  

Depreciation and amortization

    8,436     8,988     17,424  

Cash and cash equivalents

    86,571     66,857     153,428  

Capitalized goodwill

    14,034     39,325     53,359  

Other intangible assets

    4,244     409     4,653  

Other identifiable assets

    359,299     288,788     648,087  

Total assets

    464,148     395,379     859,527  

Total debt

    202,209     194     202,403  

Headcount in full-time equivalents (1)

    1,881     9,769     11,650  

Six months ended June 30, 2008

    (unaudited)     (unaudited)     (unaudited)  

Net sales to unaffiliated customers

    161,048     245,431     406,479  

Gross profit

    53,144     104,499     157,643  

Earnings from operations

    (5,541 )   63,344     57,803  

Net interest income (expense)

    (2,368 )   624     (1,744 )

Foreign currency transaction gains (losses)

    (131 )   533     402  

Income tax benefit (expense)

    175     (8,034 )   (7,859 )

Minority interest

    —       (26,367 )   (26,367 )

Net earnings (loss)

    (7,865 )   30,100     22,235  

Dividend preferred shares

    (2 )   —       (2 )

Net earnings (loss) to common shareholders

    (7,867 )   30,100     22,233  

Capital expenditures and purchase of intangible assets

    9,395     9,036     18,431  

Depreciation and amortization

    7,294     9,098     16,392  

Impairment of goodwill

    1,395     —       1,395  

Cash and cash equivalents

    95,157     57,128     152,285  

Capitalized goodwill

    10,794     33,690     44,484  

Other intangible assets

    4,442     635     5,077  

Other identifiable assets

    287,879     292,341     580,220  

Total assets

    398,272     383,794     782,066  

Total debt

    168,978     —       168,978  

Headcount in full-time equivalents (1)

    1,741     10,421     12,162  

 

(1) Headcount includes those employees with a fixed contract, and is exclusive of temporary workers.

ASM INTERNATIONAL N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

ASM International N.V, ("ASMI") follows accounting principles in the United States of America ("US GAAP"). Accounting principles applied are unchanged compared to the year 2007.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of ASMI and its subsidiaries, where ASMI holds a controlling interest. The minority interest of third parties is disclosed separately in the Consolidated Financial Statements. All intercompany profits, transactions and balances have been eliminated in consolidation.

ASM INTERNATIONAL N.V.

RECONCILIATION US GAAP - IFRS

Accounting principles under IFRS

ASMI’s primary consolidated financial statements are and will continue to be prepared in accordance with US GAAP. However, ASMI is required under Dutch law to report its Consolidated Financial Statements in accordance with International Financial Reporting Standards (“IFRS”). As a result of the differences between IFRS and US GAAP that are applicable to ASMI, the Consolidated Statement of Operations and Consolidated Balance Sheet reported in accordance with IFRS differ from those reported in accordance with US GAAP. The major differences relate to goodwill, minority interest, convertible subordinated notes, development expenses, option plans, pension plans and preferred shares.

The reconciliation between IFRS and US GAAP is as follows:

 

     Net earnings     Net earnings  
     Three months ended June 30,     Six months ended June 30,  

(thousands, except per share data)

    2007     2008     2007     2008  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

US GAAP

    14,903     9,596     26,060     22,235  

Adjustments for IFRS:

         

Classification of minority interest

    15,747     14,548     24,443     26,367  

Convertible subordinated notes

    (3,693 )   (1,641 )   (5,485 )   (3,936 )

Development expenses

    3,914     2,530     7,451     5,871  

Option plans

    2     —       6     —    

Preferred shares

    —       (2 )   —       (2 )
                        

Total adjustments

    15,970     15,435     26,415     28,300  

IFRS

    30,873     25,031     52,475     50,535  
                        

IFRS allocation of net earnings:

         

Shareholders

    15,126     10,483     28,032     24,168  

Minority interest

    15,747     14,548     24,443     26,367  

Net earnings per share:

         

Basic

    0.28     0.20     0.52     0.46  

Diluted

    0.28     0.20     0.52     0.46  
                 Equity     Equity  

(thousands)

                December 31,
2007		     June 30,
2008		  
                       (unaudited)  

US GAAP

        318,878     308,689  

Adjustments for IFRS:

         

Goodwill

        (9,569 )   (9,005 )

Classification of minority interest

        120,624     117,399  

Convertible subordinated notes

        17,151     13,215  

Development expenses

        29,717     34,351  

Pension plans

        747     741  

Preferred shares

        —       (220 )
                

Total adjustments

        158,670     156,481  

IFRS

        477,548     465,170